Update: The advice further down on this web page was put on the website a number of years ago. And while it was good advice then, and some of it is relevant now, most people contacting us these days on leasing issues just own very small shares of interests in mineral tracts — often inherited unknowingly from grand or great-grand-parents. And these days it is hard to get different companies to bid against each other (as noted below) because they have kind of divided up the available drilling turf in the State. In addition, importantly, the West Virginia Legislature has passed “forced pooling” and “cotenancy” statutes. As a result, unless you own large interests, our advice is usually going to end up being, “do nothing”. Do not sign the lease (or even an amendment to an old lease if that is what they offer), and attending any hearings will not have a benefit. The result of doing nothing will be that your mineral property will be “force pooled” (or subjected to “contenancy”); and that means that you will be given the highest royalty others got who did sign leases, plus you will get their average signing bonus (and the royalty is more important in the long run than the signing bonus). Almost as importantly, if you allow your mineral property to be force pooled without you signing a lease, you will not be subject to all the unfair fine print provisions that drillers’ lawyers slip into the leases the drillers want you to sign. After checking out the links below, go to our page on forced pooling/unitization. If the last offer you get uses the exact words that it is their “best and final offer” they may also be planning on using “cotenancy”, and there is a link to that on the forced pooling web page linked just above.
1. Do not be be rushed to sign a lease in a few days. Your grandchildren – no, your great-grandchildren, can be bound by what you sign. The more in a hurry the landman is, the more they are trying to put something over on you.
2. Understand what you are signing. Read the longer article on our web site about leases. Hire a knowledgeable lawyer to explain the lease to you. (You spend hundred of dollars each year for homeowners’ insurance and car insurance. Think of the lawyer’s fee as insurance for years and years for your mineral and other property rights.)
3. There is nothing in law called a “standard” lease. You are accustomed to signing consumer contracts in which the provisions are largely dictated by consumer protection laws that were enacted in response to abuses by merchants. You may not understand the provisions, but you trust they are not too bad. There are NO laws protecting consumer/landowners on what a lease can and cannot say. You can only trust that the company’s lawyer made it as good for the company as possible.
- Scratch out what you do not want int eh lease, like storage, secondary recovery, coal bed methane, and giving a “general” warranty”.
- Add an addendum with what you want, like protecting some areas from drill pads and roads, setting out the seeds you want replanted, free gas, etc.
4. Join with neighbors to increase bargaining leverage. The more acres you are leasing the more bargaining leverage you have in negotiations. If the landman says that if you do not sign the lease right now, the landman will get a lease from neighbors and drain the gas out from under you without paying, then you should get to the neighbor first. Put together a couple hundred or even a couple thousand acres and negotiate together – and share lawyer expenses. (We do not recommend signing rights over to huge, huge bargaining groups. There have been disappointments with many of them.)
5. Shop around. Find other landmen and companies. Talk to neighbors or go to the courthouse record room and see what companies have recorded leases or have people researching oil and gas land titles. Get the companies bidding against each other. Think of what the value of the lease is to the driller is, not just what the value is to you.
6. Join the West Virginia Surface Owners’ Rights Organization. Help support this web site and our advocacy and education.
